Shinsei may exit MF venture here, post-US subprime knocks

MUMBAI: Japanese financial services firm Shinsei Bank may exit its mutual fund venture in India, and has already initiated talks with Indian Bank to sell its stake, two people familiar with the development told ET. Indian Bank is exploring the possibility of setting up a mutual fund venture in India. When contacted, the spokesperson for Shinsei in India denied the development. ���There is no such thing happening... these are just rumours,��� he said.

It is believed the move has been prompted by the problems being faced by Shinsei Bank in its home country. According to foreign media reports, Shinsei Bank is in talks for a merger with Aozora Bank, also Japan-based. Both banks have been hit by their exposure to US subprime loans, and other failed overseas investment bets.

Shinsei Bank had joined hands with leading proprietory investor Rakesh Jhunjhunwala and Freedom Financial promoted by Sanjay Sachdev, the India head of Shinsei Corporate Advisory Services. Shinsei holds 75% in the asset management company, Mr Jhunjhunwala 15% and Freedom Financial, the rest. Shinsei got Sebi approval for starting its mutual fund operations early this year, after waiting for nearly three years. It is yet to launch a single fund, though it has got the Sebi nod for a liquid scheme, and is awaiting clearance for a PSU Bond Fund.

In 2007, the Japan-based bank had roped in N Sethuram, former chief investment officer of SBI MF, as CIO of its mutual fund venture. It now has a team of about 32 people. ���Getting a mutual fund licence is a time- consuming process... the new buyer gets a ready platform. Apart from the licence, they also get the infrastructure,��� said an official familiar with the regulatory process, on why a buyer would be interested.

Shinsei has invested more than $150 million in India through its proprietary fund. These include an investment in the State Industrial Corporation of Maharashtra (SICOM), the investment arm of the Maharashtra government, and in a hotel venture.

The bank is also learnt to be reviewing its joint venture with UTI International, a 100% subsidiary of UTI Asset Management Company, which was set up in December 2006 to explore investment opportunities in South East Asia. It has an offshore fund in partnership with UTI MF, which manages assets worth more than Rs 1,000 crore. When contacted, a UTI MF official declined to comment on its ventures with Shinsei.